Procurement activities

Zarubezhneft’s purchasing activities are carried out as per Federal Law No. 223-FZ — Concerning the PurchasePurchasing of Goods, Work and Services by Certain Types of Legal Entities, and with the Purchasing Policy. In 2017, Zarubezhneft arranged the review by the Tender Committee of 386 goods, work and service purchasing procedures in the total amount of more than 57 bln RUB.

To improve purchasing openness and transparency, the online trading platform system was used, and the purchasing information was published in the Unified State Information System and corporate information resources, and as a result the number of bidders was increased and the Company’s bid selection capabilities were enhanced under the best conditions.

The Company interacts with potential suppliers / contactors to ensure cost optimization and saving. According to the bidders’ technical and commercial offer analysis, when possible reduction of goods and service cost were identified, the bidders were given an opportunity to improve the commercial offers to provide a maximum possible discount. Thus, in 2018, a significant cash saving of RUB 1.4 bln was achieved.

The following results were achieved as a result of measures taken to provide a wider purchasing access for small and medium business at Zarubezhneft JSC in 2018:

  • public purchasing efficiency audit was provided by means of regular meetings of the Advisory Body to discuss Zarubezhneft’s purchasing efficiency issues;
  • the share of purchasing by small and medium business entities was equal to 62.24% with the current established target value of 18% (Decree of The Government of the Russian Federation No. 1352 dated December 11, 2014 – Concerning the Aspects of Participation of Small and Medium Business Entities in Purchasing of Goods, Work and Services by Certain Types of Legal Entities);
  • the share of purchasing carried out as a result of participation of only small and medium business entities has reached 34.25% during the period under review with the target value of 15%;
  • Zarubezhneft’s Partnership Program, which involved small and medium business entities, was joined by 26 companies.

While doing its business, Zarubezhneft follows the import substitution policy adopted by the Government of the Russian Federation, which is one of the strategic focus areas for state-owned companies for the next few years. Therefore, the Company carries out planned and gradual substitution of foreign products with Russian ones on a continuous basis. As a result the share of purchased products, work and services of foreign origin is consistently decreasing in projects implemented in the Russian Federation and currently does not exceed 1.03%.